Pompeo Declares Economic War on Iran

The Trump administration’s new strategy on Iran essentially amounts to economic war. In a speech on Monday, Secretary of State Mike Pompeo vowed “unprecedented financial pressure in the form of the strongest sanctions in history” unless the Islamic Republic renounced all its nuclear activities, its ballistic missile program, and its support of regional proxies.

“The [Iranian] regime has been fighting all over the Middle East for years,” Pompeo said at the Heritage Foundation, a Washington, D.C., think tank. “After our sanctions come in force, it will be battling to keep its economy alive. Iran will be forced to make a choice: Either fight to keep its economy off life support at home or squandering precious wealth on fights abroad. It will not have the resources to do both.”

And if there were ever any doubts, Pompeo’s unambiguous remarks were complemented by the U.S. Defense Department, where a spokesman said the U.S. will take “all necessary steps to confront and address Iran’s malign influence in the region.”

Pompeo offered this outline weeks after President Trump withdrew the United States from the Joint Comprehensive Plan of Action, as the nuclear accord with the Islamic Republic is officially known, ordered the reimposition of all sanctions on Iran, and gave companies with investments there varying periods to wind up their dealings or face penalties. He said the U.S. would now work with its international partners to deter “Iranian aggression” and “advocate for the Iranian people.”

Pompeo’s list of demands on Iran was long. If it wanted diplomatic and commercial relationships with the U.S., he said, it would have to end its ballistic missile program as well as its support for terrorist groups like Hezbollah and its regional malfeasance in places like Iran and Syria. The contours of the list were familiar; many of the demands echoed what the Iran deal’s critics said had been left out of the nuclear deal, rendering it in their view fatally flawed. All together, the number of Pompeo’s asks clocked in at 12. “If you look at it these are 12 basic requirements the length of the list is simply the scope of the maligning behavior of Iran,” he said. “We didn’t create the list, they did.”

Pompeo’s remarks also included elements of the presentation made on April 30 by Israeli Prime Minister Benjamin Netanyahu, a strident critic of the accord. At the time, Netanyahu had billed his speech as containing a major set of revelations, though he said little that wasn’t known publicly already. He did, however, insist that new intelligence showed how thoroughly Iran had lied about having had a nuclear program. (The skepticism of the world about Iran’s intentions was why the agreement was signed in 2015.)

But what’s the likelihood Pompeo’s vision will come to pass? “He’s not asking the leopard to change its spots,” Barbara Slavin, director of the Future of Iran Initiative at the Atlantic Council, told me regarding what Pompeo was demanding of Iran. “He’s asking it to become a lamb.” Slavin, a longtime supporter of the JCPOA, said the demands outlined by Pompeo were also the demands of Iran’s biggest adversaries: Saudi Arabia, the United Arab Emirates, Israel, and the U.S. She said of Pompeo’s speech: "It’s audacious, it’s bold, and it’s totally unrealistic.”

Mark Dubowitz, the chief executive of the Foundation for Defense of Democracies, called Pompeo’s speech a “big plan and a big offer.” But, said Dubowitz, a critic of the JCPOA:  “On the one hand, the administration is saying we’re going to put the regime under a world of hurt. On the other hand, the regime is winning in the region. So one of the things the administration has to be very careful about is a comprehensive agreement that locks in Iranian regional dominance. Iran would like nothing more than to reach some kind of armistice agreement based on its current position in the Middle East.”

Iran says it will abide by the agreement as long as the other signatories provide it with the kinds of foreign direct investment that will restart its economy, which was hobbled by years of international sanctions. Britain, France, and Germany, the three European countries that are also party to the agreement, said they will remain in the JCPOA, as did China and Russia. Last week, the European Commission, which is the European Union’s executive arm, said it would adopt regulations that would prevent European companies from complying with sanctions the U.S. will reimpose; though the largest European companies themselves have said the uncertainty caused by the U.S. withdrawal would all but ensure their withdrawal from Iran. U.S. sanctions on these companies would mean, among other things, they are blocked from doing business in the U.S. and lose access to the U.S. financial system. As I wrote last week: “For the largest European companies, the choice of doing business in the United States, a country with a $18 trillion economy, and Iran, one with a $400 billion economy, is simply no choice at all.”  

Pompeo was clear Monday that European companies would not be granted special waivers to work in Iran. “We understand that our reimposition of sanctions and coming campaign on the Iranian regime will pose economic difficulties for a number of our friends—indeed, it imposes economic challenges to America as well,” he said. “These are markets our businesses would love to sell into as well. And we want to hear their concerns, but you know, we will hold those doing prohibited business in Iran to account.”

Dubowitz told me the Europeans were stuck between an “Iranian rock and a Trumpian hard place.” He said Pompeo’s strategy “gives Europeans a possible way out of possible Iranian and American escalation, but it may be a nonstarter for Europeans who are angry with the president who they see as unreliable and someone who they see as a threat to their economic and political sovereignty.”

Given the skepticism of traditional U.S. allies, then, the secretary of state finds himself looking further abroad in hopes of assembling a kind of coalition of the willing for a new Iran deal. Pompeo said the U.S. would work to include in a new arrangement, in addition to Europe “the Australians, Bahrainis, Indians, Japanese, Omanis, Saudi Arabia, South Korea, the U.A.E., and many, many others.”

“Indeed, we welcome any nation which is sick and tired of the nuclear threats, the terrorism, the missile proliferation, and the brutality of regime which is at odds with world peace, a country that continues to inflict chaos on innocent people,” Pompeo said.

Slavin told me that while Europe would ultimately go along with the U.S. plan, the Europeans are “not going to be a willing participants in this strategy.”  European officials, who had worked on the negotiations for 12 years, were upset over the U.S. withdrawal, because they believed the U.S. was ignoring Europe’s core national security interests. (European officials say they are most at risk if Iran develops a nuclear program.) European officials said the debate over the JCPOA, and Europe’s apparent inability to keep the U.S. in, meant that, in the words of German Chancellor Angela Merkel, “Europe must take its destiny in its own hands.”

And in that sense, the Iran debate is about much more than Iran. Dubowitz said: “The real question is whether the Europeans will play along with the Iranian regime strategy of driving a wedge between Europe and the United States.”